If my previous life as a product manager taught me anything, it was to largely ignore what people told me they wanted.
It sounds arrogant I know, but it turns out that all of us – customers included – are really bad at predicting our own behaviour.
As a business, that means you can risk making the wrong decision based on what customers say they’ll do rather than what they actually will.
According to US journalist Derek Thomson, there’s a significant mismatch between what people say they want to read as news and what they actually do, or as he puts it: “Ask audiences what they want, and they’ll tell you vegetables. Watch them quietly, and they’ll mostly eat candy.”
For instance Americans claimed national, local, economic, political and international news were most important, but a review of the ‘most read’ articles suggested more interest in celebrity and human interest stories.
A spot check of Fairfax and News Corp online sites suggests Aussies are no different.
This is a classic example of what I call the Say v Do gap – the mismatch between what people think they want and what they actually use. People used to tell me they would use a list of rubbish bin days in their phone directory, but real behaviour sees those same people simply following whichever bin their neighbour has put on the kerb for collection.
The Say v Do gap stems from how humans think. Most of the day we are on auto-pilot, relying on mental short-cuts and rules of thumb to navigate the world. We typically use price as an indication of quality, for example. The upside is we can make decisions efficiently; the downside is some of these decisions might suck.
The interesting thing is that when we are asked what we might do we forget all about our auto-pilot and switch into our most considered, rational, thoughtful selves – the part we use only fleetingly during the course of an average day.
“Yes”, we answer, “my health is important to me” before we go home and sit on the couch to eat ice-cream. “Of course superannuation is important”, we say before another year passes during which we’ve spent more time thinking about petrol discount vouchers than our financial future.
Behavioural economics is a field of behavioural science that offers those of us in business a way of anticipating the responses of the ‘auto pilot’ version of the customer rather than the unrealistically rational ‘pilot’.
Behavioural economics fills a gap in how we understand our customers, noting that as a business we need to stake our decisions on two things:
Many traditional mechanisms for understanding customer behaviour like focus groups or customer surveys have relied on self-reports. In other words, we’ve been asking our customers to rationalise or anticipate their behaviour – engaging their pilot to explain auto-pilot behaviour – and as we’ve seen in the ‘say v do gap’, this is fraught with risk.
Instead, behavioural economics relies on observed behaviour – what people actually do in response to a given set of circumstances.
In the absence of anything else, past behaviour can give you some indication of future likelihood. After all, people are creatures of habit and when in doubt will stick to the status quo.
But beware, this is a massive trap businesses fall into – we think because people have they will continue to. I know from painful experience that just because you’ve drawn a projection line in Excel doesn’t mean the trend will happen! If you ever catch yourself thinking past behaviour will predict future with any accuracy, just remember Kodak, Blockbuster, Microsoft and 80s hairstyles.
So how do we get a sense of future behaviour if past behaviour might mislead?
By identifying the biases underpinning behaviour, these principles can be used to anticipate, predict and shape future behaviour. For example, through the principle of Loss Aversion we know that people are more motivated to avoid loss than seek gain, so as a business we need to anticipate and shape our customer engagement strategy with this in mind. A barrier to take-up of a new product or service is going to be that our customer may feel anxious about what they have to give up or that they have to trust a business they’ve never dealt with before, so we need a plan to address this.
I know that ignoring what customers say seems extreme, and of course listening to feedback will help you understand how your customer has rationalised their experience with you. But always bear in mind that the person you ask and the person who acts are likely to be different. A pilot’s perspective is not necessarily the same as their auto-pilot’s behaviour and as a business you need to understand who really holds the purchasing power.
Bri Williams is an authority on behavioural economics applied to everyday business and personal effectiveness.
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